Hain Celestial has reported another quarter of falling sales and net losses as president and CEO Alison Lewis pursues her “turnaround strategy”.
Lewis, who took the helm permanently in December, has embarked on a plan to cut 30% of the US food and drink group’s portfolio in North America.
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
The sale of snacks, including the brands Garden Veggie, Terra chips and Garden of Eatin’, was announced in February to Canada-based Snackruptors for $115m.
That disposal amounted to a pre-tax loss of $51m in the third quarter to 31 March of the total net losses of $106m delivered for the three months, Hain Celestial reported today (11 May). The loss was, however, trimmed from the $135m a year earlier.
Another impairment charge was also recorded as part of the losses. Hain Celestial said the $46m of pre-tax non-cash charges “related to goodwill and certain intangible assets, as well as assets held for sale”.
Adjusted for the snacks business sale, the bottom-line loss was $1m compared to a $6m profit in the corresponding period.
Sales and volume/mix also fell, with the latter down 11 percentage points. Reported sales dropped 13% to $338m and were down 6% in organic terms.
Lewis said: “Third-quarter results reflect improving execution and financial discipline as we continued to strengthen our foundation and advance our turnaround strategy.
“Strong cash generation and debt reduction materially improved our financial position, while the completion of the North American snacks divestiture further enhances our margin and cash flow profile going forward.”
Hain Celestial’s adjusted EBITDA print was more positive, delivering a $26m profit but below the $34m a year prior.
Losses were still recorded in EPS, at $1.17 per diluted share versus a negative $1.49.
Lewis has reduced Hain Celestial’s total debt to $549m from $705m at the start of the financial year, while free cash flow was $35m, compared to an “outflow” of $2m in the year-earlier quarter.
Hain Celestial operates two financial reporting divisions for North America and international. Sales from both fell in the third quarter.
Organic net sales decreased 3% in North America to $171m. International dropped 8% to $167m.
In North America, Hain Celestial said the decline in sales was driven by its baby and kids categories but were supported by drinks.
For international, the sales decrease was led by meal preparation products and baby and kids.
“In North America, our core business remains resilient, and we are making progress in addressing stranded costs,” Lewis said.
“Our near-term priorities remain the same: optimise cash, strengthen the balance sheet, improve profitability, and stabilise sales, while our five actions to win position Hain for sustainable, profitable growth.”
John Baumgartner, a managing director at Mizuho Securities, said “revenue remains broadly weak”.
He added in a research note today: “Pressure on organic sales remains broad, across multiple categories and both operating geographies, and augurs potential headwinds for valuation should Hain choose to divest additional assets as part of its announced strategic review.”
